Interserve shares tumbled by as much as 15 per cent after the troubled outsourcer saw losses more than double last year.

Interserve, which holds several Government contracts and employs 80,000 people, said losses widened by 61 per cent to £244.4million in 2017, from a £94.1million loss in 2016, due to margin pressures and losses from a waste-to-energy project.

The full-year results for Interserve - which issued two profit warnings last year but secured extra funding from its lenders in March - come amid fears that the contracting and business services sector is plagued by structural problems that have already destroyed one major player Carillion.

Troubled: Interserve, which holds contracts with the London Underground, saw losses widen

Its sectoral neighbours like Capita, Serco and Interserve have spent the last 18 months trying to convince households and investors that they are fundamentally different from the failed contractor.

Chairman Glyn Baker said that the ‘turmoil of the past 16 months is behind us, but the hard work is not’.

However investors were not reassured and Interserve shares dropped by 15 per cent at one point, although losses moderated in the afternoon, with shares down 11.8 per cent at 94.29p.

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Baker added: ‘We have made good progress in dealing with the challenges of progressing our exit from Energy from Waste but significant risks clearly remain.

'The tasks of improving Interserve's business, restoring financial resilience to our balance sheet and rebuilding trust with, and value for, our shareholders are just beginning. I am confident that we now have the necessary leadership to succeed.’

Interserve said it was renegotiating a loss-making contract to provide probation and rehabilitation services to the Ministry of Justice.

Last month the company agreed a £196.6million cash injection and £95million in bonds following talks with its banks, which include HSBC, Lloyds, RBS and Barclays.

The total debt pile will stand at £834million once the refinancing is complete.

However, this means the group now expects interest costs to increase ‘substantially’ this year.

‘We anticipate interest costs to increase substantially in 2018, reflecting both increased average net debt levels and increased interest rates following the April 2018 refinancing’, the group said today.

Year-end net debt was £502.6million, a 45 per cent increase from £274.4million in 2016, the group said. Revenue was broadly flat at £3.25billion.

Interserve is responsible for British military bases in Gibraltar and the Falklands and holds several contracts with local authorities, the London Underground and for Whitehall offices.

The group was hit by disappointing trading in July and August. In September it issued a profit warning after making a £195million loss on a contract to build incinerators to turn waste into energy.

Then in October it warned again over profits and a potential breach of its banking covenants as it grappled with escalating staff costs, squeezed margins and a flagging performance from its justice business.